He served two years in the U.S. Marine Corps. An anti-nepotism rule precluded Baker from joining the family law firm, so in 1957 he signed on with a rival Houston law firm. It was only in 1970, after the death of his wife, that he entered politics to manage the Republican senatorial campaign of his friend, George Bush. Bush lost, but the experience left Baker a committed Republican.
In 1975, Baker joined the administration of President Gerald Ford as undersecretary of commerce. In 1976, he headed Ford's unsuccessful presidential campaign against Jimmy Carter. He made his own unsuccessful bid for elective office--attorney general of Texas--in 1978. In 1980 he managed Bush's unsuccessful campaign for the Republican presidential nomination. However, he later succeeded in arranging a political alliance between Bush and Reagan that culminated in the nomination of Bush for the vice-presidency. In November 1980, President-elect Reagan named Baker to head his White House staff. With his deputy chief of staff, Michael Deaver, and Reagan's close adviser, Edwin Meese, he was part of a team in charge of the administration's political functioning. Notably, Baker helped engineer passage of Reagan's massive income-tax reduction in 1981.
In 1985, at the start of Reagan's second term, Baker switched jobs with Secretary of the Treasury Donald Regan. In September 1985, Baker negotiated the "Plaza Accord" among the five leading financial powers, which sought to reduce the exchange rate of the dollar in order to lower the U.S. balance-of-trade deficit. Nevertheless, high U.S. interest rates, due to the huge budget deficits stemming from the 1981 tax cuts, impeded this process. In October 1987, by threatening to act unilaterally to lower the dollar's international value, Baker triggered a major stock-market crash that finally brought the dollar to the desired level.
On taking office in January 1989, President Bush named Baker to the post of secretary of state. In 1989-1990, Baker worked closely with the Soviet foreign minister, Eduard Shevardnadze, to arrange the diplomatic formalities governing the Soviet Union's renunciation of control over central and eastern Europe. During the international crisis that followed the Iraqi invasion of Kuwait on Aug. 2, 1991, Baker played a very limited role due to Bush's consistent rejection of any diplomatic resolution of the confrontation. However, after Iraq was crushed in the 1991 Persian Gulf war, Baker was back in the limelight as he traveled through the Middle East trying to arrange a U.S.-brokered peace settlement among Israel, the Palestinians living in those territories occupied by Israel during the 1967 war, and the major Arab countries. Baker was successful in getting peace negotiations started, but in August 1992, with the Middle East peace process far from complete, Baker left the State Department to direct Bush's reelection campaign.